hotel financing – Lodginghttp://lodgingmagazine.com
Official Publication of the AH&LAFri, 09 Dec 2016 20:22:37 +0000en-UShourly1https://wordpress.org/?v=4.6.1Deutsche Bank to Lend $1.9B to Kyo-ya Hotels & Resortshttp://lodgingmagazine.com/deutsche-bank-to-lend-1-9b-to-kyo-ya-hotels-resorts/
http://lodgingmagazine.com/deutsche-bank-to-lend-1-9b-to-kyo-ya-hotels-resorts/#respondWed, 16 Apr 2014 13:56:03 +0000http://lodgingmagazine.com/?p=10951Deutsche Bank AG will lend $1.9 billion to Kyo-ya Hotels & Resorts LP, owner of five Starwood-branded hotels in Hawaii and one in San Francisco, reports Bloomberg Businessweek. The Frankfurt-based lender, which was competing with Credit Suisse Group AG, JPMorgan Chase and Co. and Citigroup Inc. to underwrite the deal, plans to package the debt into about $1.5 billion of commercial-mortgage bonds, according to people with knowledge of the negotiations. The transaction will mark the ...

]]>Deutsche Bank AG will lend $1.9 billion to Kyo-ya Hotels & Resorts LP, owner of five Starwood-branded hotels in Hawaii and one in San Francisco, reports Bloomberg Businessweek. The Frankfurt-based lender, which was competing with Credit Suisse Group AG, JPMorgan Chase and Co. and Citigroup Inc. to underwrite the deal, plans to package the debt into about $1.5 billion of commercial-mortgage bonds, according to people with knowledge of the negotiations. The transaction will mark the second time in less than two years that Kyo-ya Hotels & Resorts has turned to the market to refinance, the article states.

]]>http://lodgingmagazine.com/deutsche-bank-to-lend-1-9b-to-kyo-ya-hotels-resorts/feed/0Follow the Money: What You Need to Get Hotel Financinghttp://lodgingmagazine.com/what-you-need-to-get-hotel-financing/
http://lodgingmagazine.com/what-you-need-to-get-hotel-financing/#commentsMon, 24 Mar 2014 16:13:25 +0000http://lodgingmagazine.com/?p=10403Lending is coming back, and some lenders are less cautious than they used to be. This means that an experienced hotelier with a successful track record going into a market that has a need is going to get a deal done. It also helps to put in a good amount of equity and find a lender that believes in the project. Here are few other things to be aware of: Factor in the PIP If ...

]]>Lending is coming back, and some lenders are less cautious than they used to be. This means that an experienced hotelier with a successful track record going into a market that has a need is going to get a deal done. It also helps to put in a good amount of equity and find a lender that believes in the project. Here are few other things to be aware of:

Factor in the PIP
If there’s a large property improvement plan (PIP), then you need to add it to the sale price, because it’s going to be part of the financing request. “Every hotel company is going to want to get their pound of flesh from the new operator,” says Greg Morris, managing director of Bellevue, Wash.-based Premier Capital and Associates. “If you’re buying a Hampton that’s a bit dated and Hilton wants to maintain the flag, then it’s going to ask for a pretty significant PIP to extend that franchise tag.”

Get the Right Package
Figure out what type of financing you and your investors are looking for. “A CMBS-type of finance structure is going to give you pretty good leverage, but you’re going to be tied up in it for a while and you won’t have a lot of flexibility on the back end,” Morris says. “If you’re willing to guarantee, do lower leverage, and maybe get a better rate, then I can take you to a bank.” Banks will typically supply three- to five-year loans. “As their balance sheets return to health, banks are selectively looking for development financing opportunities,” says Angelo Stambules, head of the capital markets group at Hunter Hotel Advisors. He notes that bank debt is still in the 60 to 65 percent range of construction financing. “On CMBS, you can get up to 80 percent provided you’re willing to incorporate a mezzanine loan into that deal.” If you’re looking to quickly get in and secure an asset, then you may opt for a balance sheet loan. “This will allow you to hit your performance criteria and refinance out of it to recover your equity,” Morris says. “With a bank loan, you aren’t going to get as high of a leverage and you’re going to have to guarantee, but you’re going to get lower pricing and more flexibility in your structure on the exit.”

The Myth of New Construction
By and large, the banks haven’t warmed up to new development because they get a better return with a lower risk from financing existing stock. “As long as existing assets are available, the banks are going to go after those first,” Morris says. “The stars have to be aligned for a bank to do a new construction deal. A $12 million loan on a select-service property in a secondary market is still a tough thing to get done. But as lenders build out their portfolios, they will supply better terms. “With assets performing well, investors are comfortable investing in this space, and they’re realizing that they have to be competitive,” Stambules says.

]]>http://lodgingmagazine.com/what-you-need-to-get-hotel-financing/feed/1Shaner Hospitality Closes on $8.25 Million Investmenthttp://lodgingmagazine.com/shaner-hospitality-closes-on-8-25-million-investment/
http://lodgingmagazine.com/shaner-hospitality-closes-on-8-25-million-investment/#respondMon, 24 Mar 2014 14:41:58 +0000http://lodgingmagazine.com/?p=10390STATE COLLEGE, Pa.—Shaner Hospitality Finance, a financial services firm specializing in serving the hospitality industry, has announced the completion of an $8.25 million investment in the Southbridge Hotel and Conference Center in Southbridge, Mass. Shaner Hospitality Finance purchased the existing mezzanine facility and provided additional funds to resize the capital structure and pay down debt. The investment represents the first completed financing transaction since the hospitality finance company was formed with a $100 million initial ...

]]>STATE COLLEGE, Pa.—Shaner Hospitality Finance, a financial services firm specializing in serving the hospitality industry, has announced the completion of an $8.25 million investment in the Southbridge Hotel and Conference Center in Southbridge, Mass. Shaner Hospitality Finance purchased the existing mezzanine facility and provided additional funds to resize the capital structure and pay down debt.

The investment represents the first completed financing transaction since the hospitality finance company was formed with a $100 million initial capitalization in June 2013.

The Southbridge Hotel and Conference Center combines New England architecture with a 24,000-square-foot conference center facility and features 203 guestrooms, dining room, extensive banquet facilities, a fitness center with heated indoor pool, and a number of recreational offerings.

“With more than four decades of hospitality industry experience and more than $1 billion invested in hotel properties around the U.S. and abroad, we believe there is significant demand for flexible financing that provides a comprehensive understanding of the industry and financing expertise from an owners’ perspective,” said Matthew Q. Raptosh, director of Shaner Hospitality Finance. He said that hotels that have financing needs must be well-located within their markets and possess reasonable barriers to entry, diversified demand generators, and multiple demand segments in corporate, group, and leisure. “There are a significant number of quality hotel companies that with adequate funding and restructuring of their capital can thrive in their markets.”

]]>http://lodgingmagazine.com/shaner-hospitality-closes-on-8-25-million-investment/feed/0A Booming Businesshttp://lodgingmagazine.com/a-booming-business/
http://lodgingmagazine.com/a-booming-business/#respondWed, 17 Oct 2012 21:15:11 +0000http://a93df467-d466-43cc-a069-0952b101a1e9While new development is tentatively rising overall in the hotel industry, it is booming in certain U.S. states. This demand is being fueled by the growing energy opportunities in places such as Nebraska, North Dakota, Oklahoma, Wyoming, and West Virginia where advances in drilling technology have spurred a surge of workers in need of places to stay. Comparing statewide RevPARs through June of 2012 to five years ago, a report from Marcus and Millichap National ...

]]>While new development is tentatively rising overall in the hotel industry, it is booming in certain U.S. states. This demand is being fueled by the growing energy opportunities in places such as Nebraska, North Dakota, Oklahoma, Wyoming, and West Virginia where advances in drilling technology have spurred a surge of workers in need of places to stay.

Comparing statewide RevPARs through June of 2012 to five years ago, a report from Marcus and Millichap National Hospitality Group, shows numbers more than doubled in North Dakota and also rose substantially in Nebraska, Oklahoma, and West Virginia.

Greg LaBerge, national director of the National Hospitality Group for Marcus and Millichap, compares the rapid development happening in these states to the same building boom of the Wild West.

“What you’re seeing in terms of hospitality is not just people rushing to serve the immediate need of workers, but to serve longer term goals,” he says. “There is a speculative notion that the entire paradigm of these areas will be filled in 20, 60, or 80 years from now as those regions are mined.”

Art Cahoon, CEO and president of Nakota Development Company, a firm that is building several extended-stay franchise hotels in the Bakken region of North Dakota and other nearby states, says that thousands of men, particularly in Williams County, rely on “man camps” for lodging. Man camps provide temporary, dorm-style accommodations to oil workers. But Cahoon explains that these camps, on average, cost $120 each night and have strict rules regarding visitation and alcohol.

“Man camps are trailers divided into tiny rooms with a communal cafeteria and communal bathrooms on property,” he says. “It’s not really a place that you want to spend a lot of time.”

Because of the living conditions and expenses associated with man camps, many workers seek out extended-stay hotels or select-service properties for their temporary housing needs. But the demand for rooms currently outweighs the supply.

“If you look at the construction pipeline of new development across the 50 states, the energy states are leading the vast majority of that new development,” says LaBerge. “You are going to see a larger number of assets being built including flagged hotels, extended stay hotels, and limited-service hotels. You’re certainly not seeing luxury hotels being built in these areas.”

Cahoon, a successful entrepreneur and investor based out of Florida, recognized the need for lodging in Williston, North Dakota and other areas of the state early on and formed Nakota Development Company (NDC) two years ago with the goal of building lodging and residential properties in oil-shale regions. NDC signed a franchise agreement with Value Place as the exclusive developer of the extended-stay brand in North Dakota, Montana, and Wyoming. The company opened its first Value Place property this fall in Williston and is running at an occupancy rate of 95 percent.

“We were pretty set on an extended stay model, because people are coming to North Dakota for work, not short-term visits,” says Cahoon. “We looked at the franchises that existed and selected Value Place because we thought it best fit the needs of the customers that were going to be in that market.”

Cahoon says that NDC plans to develop 12-15 hotels in areas of North Dakota, Montana, and Wyoming—all of them Value Place franchises. This fall, work will begin on the company’s next property in Dickinson, N.D., which is expected to open in the spring.

LaBerge explains that extended-stay properties are not the only type of lodging businesses that are benefiting from the boom. He says that select-service hotels are also reaping the rewards from drilling activity.

“When you talk about the amount of extended stay rooms, they fill up quickly and then that overflows into other limited service brands,” he says. “There’s just so much demand out there that it is difficult to keep up with it.”

LaBerge explains that although the market in energy states continues to look strong for developers, there is still some risk associated with investing in rapidly growing areas associated with fracking.

“If you think of any drilling operation, you’re drilling under the ground with the expectation and hypotheses that there will be significant positive results from those activities,” he says. “That’s based on a lot of math and a lot of science and some variability and assumptions. There is still some risk there. It’s a very defined and calculated risk, but it is a risk nonetheless.”

As a developer, Cahoon understands the risk factors, but believes the payoff will be worthwhile and expects his assets will continue to do well as towns in oil-shale regions grow larger and expand.

“If you come to North Dakota, you will see license plates from every state in the Union, where people have come seeking opportunities and jobs,” he says. “I think the redevelopment of the U.S. energy industry is the single biggest job creator that this country has the opportunity for. It’s our belief, along with many others, that the Bakken will develop like the Midland-Odessa area of Texas. It will go from being a sparsely populated rural area to a region of continuous development and production.”